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Compliance Compass: June mortgage deadlines ahead


With all the new federal mortgage lending rules coming out lately, it’s easy to be confused. Fortunately, most of them aren’t effective until 2014, but three rules go into effect June 1, 2013. Be sure your lending staff are on top of these changes.


Paul Guttormsson
  • For any loans secured by a dwelling (and that could include mobile homes or trailers, not just real estate), new rules prohibit the financing of any premiums or fees for payment protection – like credit life or disability insurance or debt cancellation coverage. Credit insurance is allowed in two situations: 1) where the single premium is paid separately from the loan (that is, not financed as part of the loan); and 2) where the premiums or fees are calculated and paid in full on a monthly basis. For details, see The League’s March 1, 2013 Compliance Courier.


  • Certain small lenders in rural or underserved areas will be exempt from the rules that require escrow for first-lien higher-priced mortgage loans (HPMLs). In addition if escrow is required for an HPML, a borrower may ask that it be cancelled after five years (up from the current one-year requirement). For details, see The League’s ii Release No. B068.


  • Loan documents cannot require the consumer to submit disputes about a residential mortgage loan or HELOC to binding arbitration. Agreements cannot bar a consumer from bringing a claim in court for any alleged violation of federal law. The League’s mortgage loan forms do not contain these types of arbitration clauses, but check your forms for compliance if they are from another vendor.


Questions? Contact me at (262) 408-6009.

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